What I think what happens is what Linus has also figured out a while ago (in a similar situation):

"I have chased it down, and what happens is that the new X server is trying
to switch to its newly allocated virtual console, but the old X server that
was started by rhgb is exiting at the same time, and apparently depending
on pure luck (or lack of it), the old X server will switch back to the
original VT (VT#0) JUST AFTER the new X server has tried to switch to its
new VT!

The end result is that when the new X server waits for that switch to take
effect, it will never happen (since we did actually switch to it, but then
the old X server switched back!), and it will wait forever - or rather, it
will wait until a timeout signal comes in, and at that point it will exit
with the above error!"

rhgb is the Red Hat Graphical Boot.

If that is the same scenario which is happening here, there are actually multiple bugs:

* Some process (Ubuntus graphical boot? another XServer spawned by KDM?) tries to activate a different VT just at the same time. Why does it do that? It should not do that.